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Inflation and interest rates – March 2023. Przemysław Litwiniuk, MPC member comments

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I do not exclude such a scenario that at the end of the year inflation will be in single digits. However, it is based on several optimistic assumptions, said Przemysław Litwiniuk, member of the Monetary Policy Council (RPP), in “Fakty po Faktach” on TVN24. In his opinion, the decline in inflation may be accelerated by external circumstances, and Poland may benefit from the cunning tenant effect.

– We expected that at the beginning of the year the level inflation will exceed 20 percent. Such judgments were based on documents submitted by the analysts of the National Bank of Poland. In December, such a scenario was outlined. It is worth recalling that the level fuel prices in December could be much lower than what the drivers paid for. If it had been lower in December, and then there had been an increase in prices due to taxation in January, the inflation rate would have been slightly higher and could have exceeded 20 percent, Litwiniuk said.

What will inflation be like at the end of 2023?

During Thursday’s conference, the head of the National Bank of Poland, Adam Glapiński, said that he hopes that “inflation will be in the range of 6-7 (percent) at the end of the year, let’s say in November”. He stated that it was his opinion. – This is not what the (central) bank says. NBP says it will be around 7.4, he added.

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– I do not rule out such a scenario. It is based on several optimistic assumptions. However, there is a non-zero probability of these assumptions materializing, therefore the inflation rate, the level of price growth may decrease, which does not mean that prices will fall, because unfortunately, even a one-digit inflation rate means that prices continue to increase at this rate based on the base, which will be the previous year, i.e. 2022 – emphasized Litwiniuk.

He explained that the fall in inflation was “mainly evidenced by external circumstances”. – Decrease in economic activity in Europe and in the world, fading supply shocks, problems with the supply of raw materials at high prices or energy carriers. This is the basic area of ​​CPI (consumer) inflation, but inside we are still dealing with service price inflation, which will be more difficult to combat, explained the MPC member.

– What is external, what is less dependent on domestic monetary policy instruments, can help us quickly. We can take advantage of the effect of a “clever tenant”, who does not turn up his radiator himself, but uses the activity of neighbors who heat their apartments – described Litwiniuk.

According to the MPC member, there are grounds to believe that there will soon be a rapid process of disinflation. – The question is how we will cope with overcoming inflation when it reaches the level of 7-8 percent. In the United States, inflation is above 6 percent, in the European Union above 8 percent, and no one is happy about it, he stressed.

When asked when inflation in Poland will be at the level of 7-8 percent, Litwiniuk replied: – It may be in a year, maybe a little earlier. It depends on the attitude of producers and consumers.

Interest rates and inflation in Poland

The Monetary Policy Council at the two-day meeting ending on Wednesday did not change interest rates. This decision was expected by most economists. The main NBP rate, the reference rate, remained at 6.75%.

– Regarding the prospect of lowering interest rates – this is my opinion – there is no such chance this year and there is no next year, because the entire projection (NBP), which was presented this morning, has one basic assumption: unchanged interest rates. So if we enter the target space only in 2025, not the 2.5 percent target, but the target space (plus/minus 1 percent – ​​ed.), an in-minus change in the reference rate would disarm these assumptions,” said the MPC member.


According to data from the Central Statistical Office inflation in Poland in January 2022 amounted to 17.2 percent per annum. Compared to the previous month, the prices of goods and services increased by 2.4 percent. Inflation data for February will be released next week.

Read also: Good news for unlucky people. The loan installment may go down

Money from KPO and impact on inflation and economic growth

Would billions from the National Reconstruction Plan (KPO) help the Polish economy? – Definitely. This is gigantic money, which is mostly intended for investment purposes – said the guest of “Fakty po Faktach”.

He also added: – We converted the value of these funds into inflation – they would not have a significant impact. But if 3.1 percent of economic growth is planned in 2025, 2.1 percent in 2024, then if funds from KPO bring 0.5 percent of economic growth, it is a quarter of our growth. It is not little. (…) This is money that local governments have not seen for several years.

Main photo source: TVN24

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